From CES: Microsoft's Office VP Chris Capossela Unplugged

For years, the Microsoft franchises of Windows and Office have dominated the desktop computing scene and, for the most part have gone unchallenged. At best, Microsoft's worst enemy when it comes to getting people to adopt new version of its software are the old versions of its software.

For years, the Microsoft franchises of Windows and Office have dominated the desktop computing scene and, for the most part have gone unchallenged. At best, Microsoft's worst enemy when it comes to getting people to adopt new version of its software are the old versions of its software. Most installations of Windows XP, for example, didn't end up in users' hands by way of software upgrade. Instead, it was simply through the purchase of new systems that already had XP on them. Now, with new versions of both Windows (Vista) and Office in play, the big question for many is "how good is good enough?" There are still a lot of people who believe that if it ain't broke, then there's no need to fix it. And then, there's the 95 percent of the people who only use 5 percent of the features. Do they really need more features?

Compounding the difficulties in terms of getting Windows and Office users to consider an upgrade is a new set of challenges that Microsoft hasn't faced before. For example, not only could the interoperable and open document standard known as the Open Document Format (and the growing number of products and services that support it cause companies to rethink which products they're using for office productivity, for the first time in history, there's big money (like Google's money) behind Web-based delivery of some of the same functionality found in Windows and Office. Microsoft, as it turns out, has competitors. Not only smart ones (in some of the many smaller innovative smartups that are cropping up), but also committed ones with very deep pockets.

At the very least, one has to assume that Microsoft has products and services like those coming from Google being developed as a part of a larger Office skunkworks project.

While at the Consumer Electronics Show in Las Vegas, I had a chance to catch up with Chris Capossela (pictured above left), the corporate vice president at Microsoft who oversees product management for Microsoft Office and Office Live (the online companion to MS-Office). I asked him about how Microsoft is dealing with the new set of challengers (ones it hasn't really faced before), how Microsoft Office and Office Live fit together, and whether or not the company may reconsider the way its supporting the OpenDocument Format.

Here's the video in two parts:

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